Mickey Kaus gets his own taxes wrong

Mickey Kaus at home: Is this how the 47% live? (Anee Johansson / Los Angeles…)

Mickey Kaus, the neoliberal (whatever that is) blogger from L.A.'s Westside, writes in the Daily Caller that he has just discovered he had no taxed income last year.

"I am the 47%," he declares, referring to Mitt Romney's celebrated rant about non-tax-paying Obama voters. On this shallow foundation he erects a towering thought-edifice about whether and why Americans who pay no taxes are pro-government, as dictated by Republican "makers vs. takers" dogma.

When your adjusted gross income falls, "suddenly all sorts of deductions and breaks seem to open up to virtually guarantee that you pay no tax," Kaus observes. "Now that I've crossed the line, I'm monitoring my political outlook for subtle changes, in the interest of science."

A couple of things about this. First, you have to scroll down to a footnote in his post to discover that in his case paying no tax isn't the same as having no income. He seems to have had tons of income. We know this because he admits to having recently made a large estate tax payment.

How that translates into specific income we don't know, but it's proper to observe that in 2013, the first $5.25 million of estate income is exempt from the estate tax. After that the tax rate is 40%. So if his estate tax liability was large, then ... wow.

This points to the sleight-of-hand employed by Romney and perpetuated by Kaus of defining "tax" exclusively as "federal income tax." Very few of Romney's 47% pay no tax at all; they incur payroll tax to fund Social Security and Medicare -- most Americans pay more in FICA than they owe in federal income tax. They pay state and local sales taxes and quite possibly state income tax. And among the lucky duckies at the high end of the income scale who use tax shelters to zero out their income tax (there were more than 1.1 million such households among the top 1% last year, according to the Tax Policy Center), many presumably have estate tax liability or will bequeath a bill to their heirs.

Kaus speculates that the problem of makers vs. takers isn't with people who pay zero income tax, but those who pay just a little, exploiting all those deductions and breaks. "If people contribute even a little it's very easy to expect a lot in return." He thinks this explains why so many voters pay a little in taxes and "happily go to town on Social Security and Medicare." He labels these programs "middle-class entitlements."

He's wrong about that too. The average Social Security benefit this year is $1,162 a month, or less than $14,000 a year. For two-thirds of recipients, Social Security provides half their income. Is that the middle class? Maybe to the Daily Caller. As Gene Steuerle of the Urban Institute has documented, the vast majority of today's retirees fully paid for their Social Security benefits through payroll deductions during their working lives. Medicare, to which workers also contribute, has a positive return largely because America's healthcare spending is out of whack compared with other industrialized nations, not because middle-class freeloaders are "going to town."